Berlusconi on shaky ground

ROME – Italian Prime Minister Silvio Berlusconi has survived more than 50 no-confidence votes and several accusations of criminal and sexual improprieties, including charges that he paid for sex with a 17-year-old girl. But the 75-year-old billionaire might have met his match in the bond market.

With dwindling confidence in Berlusconi’s ability to manage Italy’s affairs – and the eurozone’s debt crisis hanging in the balance – investors Monday pushed up Italian bond yields to an euro-era high of 6.63 percent. That means higher borrowing costs, and it takes the yield closer to a point that tipped Greece, Ireland and Portugal over the edge and seeking financial rescues.

But that’s not all that has Berlusconi in the toughest fight of his long political life. He faces a key budget vote today that could show he has lost majority backing in Parliament. And international pressure seems to be mounting as European officials increasingly view Berlusconi as an obstacle to resolving the region’s debt crisis.

Camera crews lingered outside the parliament building as if on a political death watch, especially after one of his close advisers, newspaper editor Giuliano Ferrara, wrote online that “Berlusconi is going to resign, it’s a matter of hours.”

Berlusconi denied reports Monday that he intended to step down, but he is finding less and less room to maneuver.

European leaders at the Group of 20 summit Friday essentially forced Berlusconi to accept monitoring of the country’s finances and economic reforms by the International Monetary Fund. And on Monday, eurozone finance ministers and officials, meeting to discuss the region’s debt crisis playing out in Athens and Rome, expressed concerns about events in Italy.

“I think that the situation in Italy is quite serious,” said Finland’s finance minister, Jutta Urpilainen.

“In Greece the developments are cataclysmic,” said German Finance Minister Wolfgang Schauble. “Every day a new situation.”

But, he added, “Italy is not in a comparable situation. The real numbers from Italy do not justify the nervousness in the markets.”

Many in the markets worry that Italy, whose economy is substantially larger that Greece’s, would cause severe damage to the European and the global economies if it were to be swept up by the debt crisis.

Berlusconi was said to be working over the weekend to influence members of Parliament for whom it is increasingly difficult to keep backing the leader of the center-right party.

Mario Baldassarri, an MIT-trained economist and former vice minister of economy and finance in Berlusconi’s government, said he doesn’t see how Berlusconi could hang on for very long.

Back in August, Baldassarri said, he thought it would be just weeks before Berlusconi stepped down. But since 10 days ago, he said Monday, “I started to say days.”